Many cash-intensive industries currently use a “petty cash” system of disbursement for the purchase of small or quickly-needed items. The major advantage of the “petty cash” system is that cash is accepted almost anywhere and can be controlled by procedures commonly known in the art. The use of cash is a tradition in many industries that has it roots in the days well before credit and debit cards were even envisioned.
The entertainment production industry is typical of industries wherein cash is the predominant medium for purchasing billions of dollars of goods and services. Large sums of money are maintained as petty cash for use in procuring everything needed for producing movies, plays, commercials, and television shows. For the purposes of this document, the entertainment production industry will be used as an illustrative example. The entertainment industry has evolved procedures for managing petty cash that reflect the organization of the typical production. The procedure begins with the formation of a production company established to produce the single movie, play, commercial, or television show. This company is funded from the accounts of a studio, network, or other existing entity depending on the production type. An internal organizational structure is established as typified by FIG. 1.
Once in operation, the production accountant withdraws funds from the bank in accordance with the projected cash needs of the company. The heads of each department are allotted the funds planned in the production budget by the production accountant. They in turn, allocate the funds to their subordinates as needed.
Chits are used to authorize and track the disbursement of the cash. The user of the cash must appear at the disbursement location to sign for and obtain the cash. At some point, the users must reappear to return unused cash and present proof of valid cash usage. The accountant must then reconcile the total disbursements with the budget and with the cash drawer. This process is repeated time and again during the life of the production company.
Problems with petty cash systems have arisen with the advent of more stringent banking regulations enacted to limit money-laundering activities. These regulations require additional paperwork when completing a cash transaction of $10,000 or more. This limit is scheduled to be tightened even more in the near future. Since many productions use much more than this on a daily basis, and since the processing required to exceed this limit is cumbersome, more and more frequent cash withdrawals are made. This consumes an ever-increasing amount of administrative time. Additionally, the complexity of productions is increasing, thus causing the expenditure of even more time in budgeting, issuing, and reconciling cash.
It would therefore be desirable to have a system of petty disbursements which is easier to establish, control, track and maintain.